Demand-Supply as an IT Organizational Model

Two relatively new ways of organizing IT – demand-supply (DS) and plan-build-run (PBR) – are gaining increasing traction within business enterprises. Broadly speaking, the new models separate strategic tasks from tactical tasks, and customer-facing employees from production-focused employees. Adoption of these models is being driven primarily by the need to expand the new development pipeline, to enhance business-IT alignment and to reduce maintenance costs.

As described in a recent blog, PBR segments IT into three units. The ‘planning’ part of PBR comprises IT strategic planning, enterprise architecture, demand management and financial management. The ‘build’ unit covers all projects, including application development and handles program management as well. Application maintenance and support, ongoing datacenter management, and service desk operations fall under the ‘run’ unit. The PBR model segments IT by nature of work stream, and the model represents the need to manage development and maintenance independently.

The DS model, meanwhile, separates customer-facing tasks such as requirements management and IT strategic planning from production-focused work streams such as application development and maintenance. In ISG’s experience, the rationale behind migrating to the DS model is often to address the pressing need to be more responsive to business requirements and to achieve a closer connect between demand and fulfillment. In addition, organizations may consider a dedicated demand team in situations where business and IT’s ability to communicate has been less than stellar – either due to legacy reasons and/or a heavily sourced environment.

The graphic below outlines some of the advantages and disadvantages of these emerging ADM organizational models.

Organizational model Advantages Disadvantages
Plan-Build-Run Enables independent management – guided bydifferent objectives – of development and maintenance

 

Enables independent management of sourcing across development and maintenance; also, capacity can be handled separately

Duplicates technical talent across ‘build’and ‘run’

 

Creates risk of loss of accountabilityacross the Software Development Lifecycle (SDLC) phases

Demand-Supply Creates a clear line of sight betweenbusiness requirement and resource allocation Separates requirements definition anddevelopment, particularly challenging for iterative development

 

For many companies, the structure of IT reflects priorities of an earlier era and, moreover, is something the organization has drifted into, rather than the product of deliberate, well-thought out design. While careful analysis should always precede redesign of any complex organizational system, these new structures certainly warrant at least a thorough assessment of the frameworks and their relevance to the enterprise in question. Please share your experiences with these models.